Tax Reform Raises the Use of The Cash Accounting Method.

The Tax Cuts and Jobs Act accounting method provisions are allowing businesses greater use of the cash method of accounting and exemption from complex tax rules. An accounting method is the set of rules that apply to determine when an item or deduction is taken into account for tax purpose. The two most common methods are cash and accrual. Once an accounting method is established, it generally must be used consistently from year to year.



The cash methods available to only small business are generally simpler than the accounting methods required to be used by larger businesses. Under the cash method of accounting, income is generally recognized in the year cash is received and deductions are generally taken into account the year an expense is paid. Under the accrual method of accounting, income and expenses is generally recognized when earned or incurred, even if payment is received in a later year. Prior to December 31, 2017, limitations applied to corporations and partnerships with corporate partners. These taxpayers were prohibited from using the cash method of accounting for tax purposes unless their gross receipts were $5 million or less.  Beginning December 31, 2017, the threshold has increased to $25 million.



The IRS guidance ,released August 3, 2018, is allowing small businesses with annual grow earning of $25 million or less in the prior three-year period to use the cash method of accounting.  Business taxpayers are permitted under the Tax Cuts and Jobs Act may obtain an automatic consent to change accounting methods starting after December 31, 2017.

Under the new law, allows more taxpayers to use the cash method of accounting.  Taxpayers switching from the accrual method to the cash method is required to complete Form 3115 to make this change. Businesses must apply the gross receipts test each year to determine whether it continues to be eligible to use the cash method.

Tax reform has dramatically changed US federal income tax rules. Consult your accountant or tax advisor to develop a tax strategy to determine whether a change in accounting method is consistent with that strategy.


Disabled or Ill Missourians Can Choose Their Own Care Providers

Most ill or disabled Missourians can remain in their own homes and avoid or delay institutionalization with the help of Consumer Directed Services. Consumer Directed Services (CDS), administered by the Missouri Division of Senior and Disability Services (DSDS), are available to eligible persons at least 18 years old who have Medicaid or potentially Medicaid eligible and in need of support.

The whole point of the Consumer Directed Services program is so the person receiving services can  hire the person of their choice to provide care and assist with daily tasks such as bathing, dressing, cleaning, meal preparation,  and shopping, and be in charge of when and how most of their personal needs will be met. That’s the beauty of the Consumer Directed Services program — the person who gets the care controls the care.

The attendant may be a friend or family member, at least 18 years of age, but cannot be a spouse or legal guardian.

TWA Consumer Directed Services will pay your personal attendant salary is available to assist consumers with enrollment support, training and managing their caregiver, perform and process payroll, emergency back-up plans, criminal background checks, and helping find non-family workers.

TWA supports the consumer in directing their CDS program, and services as a liaison between the individual and the CDS program, assisting individuals with whatever is needed to sustain them as they direct their own services and supports.

TWA Consumer Directed Services number one goal is providing exceptional services to improve the lives of every person we work with.  We offer our clients the personal attention that will assist them in achieving their goals.   To begin services with TWA Consumer Directed Services, contact our CDS specialist today at 816-251-4529 or download our TWA CDS Brochure  to learn more about TWA Consumer Directed Services and CDS. 

How To Get Services Started?
Please contact TWA and talk with our CDS coordinator by calling 816-251-4529 to get more information about the CDS program.  Our CDS coordinator will discuss your current needs and gather the necessary information to get you enrolled with the CDS program.

Church and Non-Profits Record Keeping Requirement

All tax-exempt organization, including churches and religious organization (regardless of whether tax-exempt status has been officially recognized by the IRS) are required to maintain books of accounting and other records necessary to justify their claim for exemption in the event of an audit and accurately file tax and information returns that may be required.

Every church should adopt and implement a records management and retention policy that reflect its unique circumstances.

Books of Accounting and Other Types of Records
There is no specific format for keeping records. However, the types of required records frequently include organizing document such as bylaws, minute books, property records, general ledgers, payroll records, and banking records. The extent of the records necessary generally varies according the type and size of the organization.

Length of Time to Retain Records

7 Years

  • Bank Statements, checks and reconciliations
  • Acquisitions and disposition of property
  • Contributions records
  • Accounts Payable and Account Receivable records
  • Payroll tax records and registers

Permanently

  • Articles of Incorporation
  • Tax-Exempt Documents
  • By-laws
  • Annual Corporate reports
  • Corporate Seals
  • Minute Books
  • Signed Minutes of Board and all committees
  • Insurance Records and Payments (property and worker’s compensation)
  • W-2s, W-3s, 1099s, and 1096s
  • Financial Statements
  • General ledger detail

Most documents are kept 7 years mostly because IRS audits can go back a maximum of 7 years. There is no accepted standard for record-keeping, it’s totally up to the organization. Right now, the best way is with an electronic backup in PDF format.

Deciding What Business Structure Is Right For You

When you start a business, there are endless decisions to make. Among the most important is how to structure your business. Why is it so significant? Because the structure you choose will affect how your business is taxed and the degree to which you (and other owners) can be held personally liable. Here’s an overview of the various structures.


Sole Proprietorship

This is a popular structure for single-owner businesses. No separate business entity is formed, although the business may have a name (often referred to as a DBA, short for “doing business as”). A sole proprietorship does not limit liability, but insurance may be purchased.

You report your business income and expenses on Schedule C, an attachment to your personal income tax return (Form 1040). Net earnings the business generates are subject to both self-employment taxes and income taxes. Sole proprietors may have employees but don’t take paychecks themselves.


Limited Liability Company

If you want protection for your personal assets in the event your business is sued, you might prefer a limited liability company (LLC). An LLC is a separate legal entity that can have one or more owners (called “members”). Usually, income is taxed to the owners individually, and earnings are subject to self-employment taxes.

Note: It’s not unusual for lenders to require a small LLC’s owners to personally guarantee any business loans.


Corporation

A corporation is a separate legal entity that can transact business in its own name and files corporate income tax returns. Like an LLC, a corporation can have one or more owners (shareholders). Shareholders generally are protected from personal liability but can be held responsible for repaying any business debts they’ve personally guaranteed.

If you make a “Subchapter S” election, shareholders will be taxed individually on their share of corporate income. This structure generally avoids federal income taxes at the corporate level.


Partnership

In certain respects, a partnership is similar to an LLC or an S corporation. However, partnerships must have at least one general partner who is personally liable for the partnership’s debts and obligations. Profits and losses are divided among the partners and taxed to them individually.


Consumer Directed Services for Individuals with Disabilties

The Consumer Directed Services (CDS) program,  allows an individual with a disability the opportunity direct their own in-home services.  The CDS program is regulated by Missouri Department of Health and Senior Services (DHSS).  The Consumer Directed Services program is designed for individuals with disabilities to take increasing control over their lives and their environment.  In the CDS program, the consumer can hire a relative, neighbor or friend to provide personal care assistance with activities of daily living rather than requiring services through a home care agency or nursing facility placement.

TWA Consumer Directed Services (TWA) has offered personal care services since 2009 in Missouri.  Our number one goal is helping individuals with disabilities maintain their independence.

TWA serves as the Fiscal Agent for the consumer.   A Fiscal Agent plays a crucial role in providing consumers with the information needed to succeed in the CDS Program.   TWA supports the consumers in directing their CDS services, and serves as a liaison between the individual and the CDS program, assisting individuals with whatever is needed to identify potential personnel requirements, resources to meet those requirements, and the services and supports to sustain them as they direct their own services and supports.

TWA provides training about the many aspects of hiring, firing and managing their personal care assistant, as well as fiscal and payroll responsibilities.   In addition, initial training is provided to understand the basic component of the CDS program.  Our staff will also assist with other CDS support activities:

  • Emergency back-up plans
  • Workers Registry
  • Criminal background checks
  • Helping find non-family workers
  • The completion of all the paperwork and handle all tax withholding and payments to the IRS, Missouri Department of Revenue, Employment Security, and Social Security
  • Perform payroll, processing of timesheets, issuance of checks, and withholding necessary taxes
  • Respond to inquiries and resolve problems (e.g. account balances and when checks were sent out)

Application Process:    Individuals interested in receiving Consumer Directed Services must have an assessment completed by Division of Senior and Disability Services (DSDS) to determine if eligible for services and the type of services needed. The assessment is free and can be scheduled by calling  (866) 835-3505,  and request to be assessed for CDS by DSDS staff.   Have your Medicaid number ready.   Individuals not receiving Medicaid benefits contact Missouri Department of Social Services Family Support Division at (855) 373-4636.

To qualify for the CDS program all the following must apply to you:

  • You have a condition that results in a need for assistance with activities of daily living.
  • You are a current Medicaid recipient
  • You are at least 18 years old
  • You can direct your own care.
  • You meet the level of care through a needs assessment with DSDS.

Give us a call if you or someone you know and love can benefit from Consumer Directed Services.  TWA will assist the individual or participant through the determination of eligibility or referral process to receive benefits from Consumer Directed Services.

Phone: 816-251-4529

Click Here to Schedule a Phone Meeting
Click Here to Request a Consultation

Five Keys to Success For A Small Business

Statistics indicate 80% of small business make it through their first year, but only 55 percent make it to five.   So how can you increase your chances of being among the 50 percent of businesses that make it for at least five years? With this in mind, you can improve your odds with careful planning, knowing the best method of running your business successfully and a detailed strategy.

Here are the five keys to a small business success:


1. Budget the Costs
Launching and running a small business requires a thorough accounting of costs, both financial and personal. Not creating a budget, is one of the top reasons for business failure.  Therefore, make sure you have a detailed budget that includes not only startup costs but the living expenses you’ll have to take on before your business can start paying you.  In addition to anticipate major equipment purchases and real estate investments so you have a realistic estimate of your needs and costs for the upcoming year.

Numbers don’t lie, they’re not emotional and they don’t make excuses.  It’s best to assume it will cost more and take longer than you initially think it will.  If the numbers show you are in a steep decline, take action and make changes before you crash.  It’s better to overestimate the costs and be pleasantly surprised than to project an overly rosy scenario and end up bankrupt.

2. Consider Your Profit Goals
To allow your business to run successfully and earn a profit, it helps to calculate your expenses and consider your customers, goals and amount of profits you ultimately want to bring in.  From there you can determine roughly what range your profit margins should be in so that you can support all of your operations and still grow your business.

3. Outsource Your Accounting
Growing a small business is physically demanding work.  Nobody wants to end their day prepping books, especially when it some to payroll and tax preparation.  Having a monthly accounting service on your team allows you to concentrate on your business and the daily activities of managing employees, increasing your customer base, and maximizing your profits. Smart business owner knows how to lead and when to delegate.  Defining and sticking to your role provides stability for your small business.  Don’t try to be the owner and the accountant.  Expert monthly accounting services go beyond the numbers.

Experienced accountants can be used as a resource for strategic decisions and also provide proactive business advice for any stage of your business. In addition to providing accounting and payroll, an outsourced accountant will work with business owners to set clear goals for increasing profits.  In addition, as your small business grow it can present operational challenges with the need to keep expenses in check.  Accountants can identify any expense areas that are tracking above or below industry average, enabling you as the owner to make adjustments, to keep costs contained or to spend additional money in areas that could boost sales.



4. Use an Integrated Accounting System
A small business benefits from using a business-specific and integrated accounting system into its daily business practices.  A good small business accounting system provides many options including appointment control, work-in-progress, point of sale accounting, daily sales reports, invoicing, customer data and history, and report capabilities that include uploading to other software systems such as QuickBooks. This king of integrated accounting software saves money, time avoids duplicate data entry and ultimately prevents those nasty tax-based headaches that occur during tax season.

5. Stay on Top of Your Taxes
Staying on top of your taxes is a full-time job and your income tax obligation needs to be on your mind year-round.  Whether you’re a small business or an individual taxpayer, year-round tax planning is more than just a way to make tax preparation an easier, faster process.  By keeping taxes in mind as you go through every 12-month period, you’ll be able to see where you might take specific actions early that will have impact on what you end up owing.  Your budget can be a tremendous tool as you plan for the current tax year. I f you’ve never created one, an outsourced accountant can help you with this.  In addition to staying ahead of the process by outsourcing your tax planning, preparation and tax filing.